Tuesday, June 13, 2017
Producer Price Index … Nasdaq Selloff? … Market Analysis … Trading ETFs and ETF Ranking
The previous signal was a BUY on 2 June and the last actionable signal was a BUY (from a prior sell) on 15 November 2016.
"Lower costs of gasoline and other fuels kept wholesale U.S. inflation in check in May, but upward pressure on prices persisted in many areas of an economy whose expansion is the third longest in modern times. The producer price index was flat last month following a sharp 0.5% increase in April…” Story at…
VIX SPIKE & NASDAQ SELLOFF (SafeHaven)
“Last Friday June 9th, 2017, Robert Bouroujerdi, a Goldman Sachs analyst, “warned that the $600 billion outperformance by the 5 biggest tech stocks known as ‘FAAMG’ — Facebook, Amazon, Apple, Microsoft and Alphabet — had contributed about 42 percent of all stock market gains over the last year. Goldman worries that the boom has created a “valuation air-pocket,” similar to the ridiculously high valuations for tech stocks during the Dot-Com boom.” – Chris Vermeulen at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 0.5% to 2440.
-VIX dropped about 9% to 10.42.
-The yield on the 10-year Treasury slipped to 2.211%.
We’re have been clearing some of the negative signs so it may be time to be more bullish in the short run. Still, I think the short-term performance is somewhat limited; markets can go higher, but perhaps not too much higher before we move back at least a couple percent.
Longer term, I remain cautiously bullish; I will worry more in late-summer and into early fall.
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF. While momentum isn’t stock performance per se, momentum is closely related to stock performance. For example, over the 4-months from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed the S&P 500 by nearly 20%.
*For additional background on the ETF ranking system see NTSM Page at…
Technology (XLK) remains No 1 as the XLK bounced back and was up 0.7% on the day. Energy was up the same amount. The big winner on the day was the Materials Sector, XLB. It was up 1.2%.
Still, I would avoid XLE; its 120-day moving average is falling. On a shorter term basis the S&P 500 is now outperforming Utilities – I see that as a good sign. Cyclical Industrials (XLI) are outperforming the S&P 500 and that’s a positive too.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
Neutral with no positions recommended. - 5/24/2017 thru present.
I am still not bullish enough to take a long position in the trading portfolio.
-“In a bull market, you can only be long or neutral.” – D. Gartman
-“The best policy is to avoid shorting unless a major bear market is underway and downside momentum has been thoroughly established. Even then, your timing must sometimes be perfect. In a bull market the trend is truly your friend, and trading against the grain is usually a fool's errand.” – Clif Droke.
-“Commandment #1: “Thou Shall Not Trade Against the Trend.” - James P. Arthur Huprich
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched to positive on the market.
Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are usually right, but they are often late. They are most useful when they diverge from the Index. In 2014, using these internals alone would have made a 9% return vs. 13% for the S&P 500 (in on Positive, out on Negative – no shorting).
LONG TERM INDICATOR
Tuesday, Price, Volume, Sentiment & VIX indicators were neutral. (With VIX recently below 10, VIX may be prone to incorrect signals. Usually, a rising VIX is a bad market sign; now it may just signal normalization of VIX, i.e., VIX and the Index may both rise. As an indicator, VIX is out of the picture for a while.)
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I increased stock allocation to 50% stocks in the S&P 500 Index fund (C-Fund) Friday, 24 March 2017 in my long-term accounts, based on short-term indicators. Remainder is 50% G-Fund (Government securities). This is a conservative retiree allocation, but I consider it fully invested for my situation.